From Yahoo Finance: 2024-04-29 06:00:46

The Bank of Canada faces a more complex decision on interest rates after U.S. data reveals slowed growth and elevated inflation. U.S. GDP for Q1 was 1.6%, below estimates, while core inflation rose 2.8% yearly. Expectations for the first Fed rate cut moved to December. A wider rate spread from the U.S. could harm the Canadian dollar and reignite inflation concerns.

Despite the U.S. data, some experts believe the June rate cut for the Bank of Canada will proceed, but subsequent cuts are uncertain due to Fed hesitation. The ECB’s possible rate cuts in June may provide insight into the Bank of Canada’s actions. A loonie depreciation due to interest rate divergence could signal limits to monetary policy changes.

While a July rate cut pause is likely, expectations point to four rate cuts this year, starting in June and three more following September, as inflation risks falling below two per cent. Markets have priced in two Bank of Canada rate cuts already. ECB officials stress data-dependence over Fed influence for rate decisions.



Read more at Yahoo Finance: Hot U.S. inflation signal throws Bank of Canada a curveball